In a recent trip to Poland, Burmese opposition leader Aung San Suu Kyi told former Solidarity leader Lech Walesa that Poland’s path has inspired her to dream of the same for her country. She told reporters in Warsaw, “We in Burma are just at the beginning of this road that you took many, many years earlier, a couple of decades earlier, but we believe, as you did then, that we should succeed . . . It is very encouraging for me to be among people who understand exactly the kind of struggle that we would still have to go through before we can say that we are a democratic society.”

This meeting of Nobel Peace Prize laureates, important on its own, strikes me as extraordinary. Burma and Poland could not be more different culturally and historically, yet both Suu Kyi and Walesa work toward the same goal. The Iron Curtain dropped several decades ago, while Burma continues to this day to inch toward freedom. There must be something universal in the struggle for Suu Kyi to see her country and her goals mirrored in Poland and Walesa’s.

At CIPE, we talk a lot about a concept called “Democracy that Delivers,” meaning that governments should be held accountable by their citizens both during and in between elections. The success of a democracy depends on the involvement of the people under its rule. Good governments are open, responsive, and accountable to their citizens.

But, I wonder if the Burma/Poland example raises a larger question: Are democracies also accountable to those countries that continue to struggle toward freedom? Do they have a responsibility not only to their own citizens but to the citizens of the world? Should they work to uphold the tenets of transparency, accountability, and fairness because, in part, they might be the role models for a future generation? As we honor International Day of Democracy, it’s worth asking.

Botswana, which has been democratically governed since independent, has also been one of the most stable and fastest-growing economies in Africa. (Photo: Wikimedia Commons)

The relationship between government and commerce can seem fractious at times. Companies eager to please their shareholders and regimes eager for popular support each vilify the other. Socialists place too little value on the role of the private sector while laissez-faire advocates place too much. Ultimately, however, the two are not nearly so divergent. In fact, democracy turns out to be the form of government that inspires the most economic growth. It is at the intersection where the most fertile ground is discovered.

Dr. Boris Begović, a longtime CIPE partner, understands this better than most. As a chief economic adviser to the federal government of the Federal Republic of Yugoslavia for 15 months during 2000-2002, he helped guide the country through an economic liberalization process and to fast growth. He believes that democracy has certain advantages for the private sector; namely, it is a stable form of government that creates predictability in the institutions necessary for growth. Democracies allow more individuals to enter the market, ultimately helping to mitigate individual risk, increase creativity, and inspire competition.

Article at a glance

• Democracy results in higher rates of economic growth over the long term because democracies have more stable and predictable institutions and tend to implement policies that are conducive to private enterprise.

• Since they are accountable to the public rather than to elites, democracies produce more public goods, invest more in human capital, maintain the rule of law, and protect private property rights.

• Though democracies are more likely to engage in large-scale redistribution than autocracies are, the dampening effect of redistribution is offset by the fact that democracies have lower barriers to entry, promoting competition, and innovation.

Posted on30 May, 2013|Comments Off on The Serbian Experience in Transition

One of the most famous opening lines in all of literature comes from the great Russian novel Anna Karenina: “Happy families are all alike; each unhappy family is unhappy in its own way.” With that, Tolstoy encapsulates a simple truth: dysfunction takes myriad forms. That’s not to say that one cannot learn from another’s experience. Indeed, some of the most important lessons can come from those who have already tried and failed. Experience is singular, but patterns can illuminate.

Researchers have recently identified 23 words they term “ultraconserved,” meaning they haven’t much changed since the end of the Ice Age 15,000 years ago. These words—mother, man, fire, worm, and spit, among others­—sound and mean the same in most Eurasiatic language families. The most commonly shared word is “thou” – the singular form of “you”. Imagine that. Among the nearly 700 languages in these families, stretching from Great Britain to Western China, the Arctic to southern India, all of them share a very close version of this word.

Words matter because they allow us to communicate clearly. A decade ago, no agreed-upon phrase existed in Arabic for corporate governance, making debate and reform difficult. An issue can’t be addressed if it can’t be clearly defined. To that end, a CIPE-led effort resulted in the first standardized term for “corporate governance” in the Arabic language: hawkamat ash-sharikat. Developing a common term opened the door for broad-based dialogue on corporate governance in the Arab world.

Sometimes it seems that CIPE has its own language. Look at the word cloud above, created from CIPE’s 2012 Annual Report. Democracy, business, governance, public sector, private sector. These words are probably familiar, but it might not be immediately clear how they work together.

If you look at it more closely, however, you’ll see they are parts of a fully functioning, democratic, free market society. All of the pieces move together—an empowered, informed electorate can hold its government accountable. A strong private sector forms the engine of job creation and economic growth within a society. A true democracy is dependent on its citizens, its private sector, and its government to act in good faith and with good intentions.

Words matter for what they represent. The words in the image above represent the hard work of CIPE’s partners over the last year. Their stories and successes are inspiring, and we hope you’ll take the time to read about them here.

Posted on19 March, 2013|Comments Off on How Do Institutions Facilitate Entrepreneurship?

The great Peruvian democracy advocate Hernando de Soto has spent much of his career focused on bringing informal entrepreneurs into the formal sector, where their rights are enshrined in and protected by law. When citizens have the tools to access to capital and a business environment that supports them, they are able to move up the development ladder from the survival entrepreneurship of the informal sector to the prosperity of the formal economy.

De Soto’s work encouraged an important new way of thinking about how to create opportunity where none previously existed. In so doing, he and his organization, the Institute for Liberty and Democracy (ILD) in Peru, have had a profound and positive impact on the lives of millions in Peru and around the world. CIPE’s first partner 25 years ago, De Soto’s and ILD’s work personifies the proven belief that strong markets require vigorous governance and vice versa, and that open participation in both markets and government are a foundation of democracy.

In this most recent Economic Reform Feature Service article, De Soto looks at the necessity of institutions—and specifically the rule of law—to create and nurture a successful entrepreneurial environment.

Article at a glance

Creating wealth through entrepreneurship requires combining different resources (for example, the parts of a pencil or those of a watch). Institutions are crucial to facilitating that combination.

To do all the things that entrepreneurs in developed countries take for granted – like dividing labor, using property as collateral, protecting personal assets, expanding markets, or creating economies of scale – entrepreneurs in developing nations need the standards that only legal institutions can provide.

The wealthy in developing nations have convinced the poor that no matter how talented or enterprising they are, they will never succeed. In fact, the world’s most successful entrepreneurs just have access to superior legal institutions.

Entrepreneurs can create opportunity out of the most unexpected places. Sometimes, inspiration drops out of the sky – in this case, quite literally. After a meteor surprised Russia today, entrepreneurs in Chelyabinsk Oblast, located just east of the Ural Mountains, immediately began gathering and selling small pieces. Not more than 5 hours after the sonic boom that blew out windows across the region, dozens of bits (real and otherwise) were online and up for auction.

This kind of quick, flexible response typifies the entrepreneurial spirit. It is a special kind of person who can create opportunity where none existed. Small and medium-sized entrepreneurial ventures, by their very nature, must make nimble moves in response to a changing business environment. They are less insulated and therefore more vulnerable than their larger or more-connected brethren. (Jon Custer wrote earlier about the importance of failure for entrepreneurs.) These Russian meteor moguls may yet find themselves in hot water with the authorities, or they may have just found a new, celestial business model. Either way, in the run-up to CIPE’s April conference, Democracy that Delivers for Entrepreneurs, we celebrate that indomitable spirit.

In his recently published book, Essays on Governance, CIPE Board member Andrew Sherman looks at the myriad issues facing entrepreneurs and business owners. Good governance is crucial to building and sustaining a business in a complex, shifting operating environment. Mr. Sherman, a partner at the international law firm Jones Day, excerpts a chapter from the book in CIPE’s most recent Economic Reform Feature Service article. In it, he interviews Verne Harnish, a thought leader on global growth strategies and founder of Gazelles International, who discusses the importance of “The Council,” a concept first introduced by author Jim Collins in his seminal book, Good to Great. Read the article here.

Article at a glance

A reliable set of advisors is crucial when a leader plans to expand the business globally.

Leadership teams sometimes must work in untraditional ways to develop a deep level of understanding and trust.

Disagreement can be productive and can lead to strong management decisions.

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The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.